Question 1

International free trade:

Accepted Answer

A)   allows everyone involved to gain surplus.
B)   may have individual winners and losers of surplus within a country.
C)   creates surplus only for the producers in a country.
D)   creates surplus only for the consumers in a country.E) None of the above
F) A) and B)

Question 2

The right decision about what to produce and who to trade with happens:

Accepted Answer

A)   almost entirely by market decisions automatically.
B)   when governments publish comparative advantage numbers.
C)   only after firms research the cost of inputs such as labor and raw materials, and the sale prices of different goods you could produce, and calculate the most profitable option.
D)   governments from different countries get together to decide on trade.E) C) and D)
F) B) and C)

Question 3

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this economy were to open to trade,the amount consumed domestically would:

Accepted Answer

A)   increase by 35.
B)   increase by 40.
C)   decrease by 40.
D)   increase by 75.E) None of the above
F) A) and D)

Question 4

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,if this economy is an autarky,its equilibrium price is:

Accepted Answer

A)   $175 at a quantity of 815.
B)   $215 at a quantity of 500.
C)   $130 at a quantity of 1150.
D)   $130 at a quantity of 500.E) A) and B)
F) A) and C)

Question 5

As workforces become more educated in countries with comparative advantage in labor-intensive products,the comparative advantage for the production of those labor-intensive goods shifts:

Accepted Answer

A)   toward other countries with less cheap labor relative to the other factors of production.
B)   away from countries with more cheap labor relative to other factors of production.
C)   toward other countries with more cheap labor relative to the other factors of production.
D)   toward countries with more capital for production.E) A) and B)
F) A) and C)

Question 6

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this economy were to open to trade,which amount of surplus would be transferred?

Accepted Answer

A)   Area FG would be transferred to the consumer.
B)   Area DE would be transferred to the consumer.
C)   Area DEFG would be transferred to the consumer.
D)   Area FG would be transferred to the producer.E) All of the above
F) B) and C)

Question 7

An important determinant of comparative advantage is:

Accepted Answer

A)   homogeneity of climate and natural resources between countries.
B)   endowment of factors of production.
C)   equal technology levels across nations.
D)   well established governmental regulations on trade.E) None of the above
F) A) and B)

Question 8

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,the amount of deadweight loss created by the imposition of a tariff is area:

Accepted Answer

A)   IL
B)   JK
C)   IJKL
D)   FGJKE) B) and D)
F) B) and C)

Question 9

Suppose a country,whose production and consumption of coffee is large relative to the world market,has just entered the global market.If the country is a net exporter of coffee,we would expect the world:

Accepted Answer

A)   supply curve to shift more to the right than the world demand curve as a result.
B)   supply curve to shift more to the left than the world demand curve as a result.
C)   demand curve to shift more to the right than the world supply curve as a result.
D)   demand curve to shift more to the left than the world supply curve as a result.E) A) and B)
F) C) and D)

Question 10

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According the graph shown,if this economy were open to free trade,it would:

Accepted Answer

A)   import this good, because the domestic price is greater than the world price.
B)   export this good, because the domestic price is greater than the world price.
C)   import this good, because the world price is greater than the domestic price.
D)   export this good, because the world price is greater than the domestic price.E) A) and C)
F) C) and D)

Question 11

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this were depicting an autarky economy,the equilibrium price would be:

Accepted Answer

A)   $23
B)   $16
C)   $11
D)   $45E) A) and C)
F) None of the above

Question 12

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good.  According to the graph shown,if the government restricts trade,area G represents:

Accepted Answer

A)   government tax revenues.
B)   deadweight loss.
C)   quota rents.
D)   transferred surplus.E) B) and D)
F) None of the above

Question 13

A country with plenty of capital and little land may have a comparative advantage in:

Accepted Answer

A)   land-intensive activities.
B)   capital-intensive activities.
C)   labor-intensive activities.
D)   technology-intensive activities.E) None of the above
F) A) and B)

Question 14

The fair trade movement:

Accepted Answer

A)   attempts to inform and influence consumers' choices.
B)   is a set of laws around production processes in other nations.
C)   is designed to stop unfair trade practices.
D)   a big hindrance to international trade.E) B) and C)
F) B) and D)

Question 15

We call an economy that is self-contained and does not engage in any trade with outsiders a(n) :

Accepted Answer

A)   autarky.
B)   oligopoly.
C)   oligarchy.
D)   monarchy.E) A) and B)
F) A) and C)

Question 16

Over time,technology tends to:

Accepted Answer

A)   set countries apart in terms of productivity.
B)   allow developing nations to experience the "catch-up" effect.
C)   diminish in nations that are still developing.
D)   spread from country to country, equalizing opportunity costs.E) None of the above
F) A) and B)

Question 17

For the most part,trade between many countries:

Accepted Answer

A)   is entirely unregulated or free.
B)   is regulated or restricted in some way.
C)   is free, with the notable exception of China.
D)   causes the well-being of some nations to win and others to lose.E) A) and D)
F) All of the above

Question 18

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this were depicting an autarky economy,the amount being bought domestically is:

Accepted Answer

A)   45 at $11 each.
B)   45 at $23 each.
C)   85 at $16 each.
D)   120 at $23 each.E) None of the above
F) All of the above

Question 19

International trade will:

Accepted Answer

A)   create more efficiency.
B)   increase total surplus only if the country is a net-importer of a particular good.
C)   increase total surplus only if the country is a net-exporter of a particular good.
D)   decrease total surplus, which creates a role for government.E) B) and C)
F) None of the above

Question 20

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good.  As shown in the graph,when a government imposes a quota,consumer surplus will:

Accepted Answer

A)   decrease by EFGH.
B)   increase by EFGH.
C)   decrease by FG only.
D)   increase to ABCD.E) A) and D)
F) All of the above

Exam 17: International Trade

Suppose a country,whose production and consumption of coffee is large relative to the world market,has just entered the global market.If the country is a net exporter of coffee,we would expect the world:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this were depicting an autarky economy,the amount being bought domestically is:

Correct AnswerverifiedShow Answer

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good. As shown in the graph,when a government imposes a quota,consumer surplus will:

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International trade will:

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This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good. According to the graph shown,if the government restricts trade,area G represents:

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We call an economy that is self-contained and does not engage in any trade with outsiders a(n) :

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A country with plenty of capital and little land may have a comparative advantage in:

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Over time,technology tends to:

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For the most part,trade between many countries:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,if this economy is an autarky,its equilibrium price is:

Correct AnswerverifiedShow Answer

International free trade:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,the amount of deadweight loss created by the imposition of a tariff is area:

Correct AnswerverifiedShow Answer

The right decision about what to produce and who to trade with happens:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this were depicting an autarky economy,the equilibrium price would be:

Correct AnswerverifiedShow Answer

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy were to open to trade,the amount consumed domestically would:

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An important determinant of comparative advantage is:

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As workforces become more educated in countries with comparative advantage in labor-intensive products,the comparative advantage for the production of those labor-intensive goods shifts:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According the graph shown,if this economy were open to free trade,it would:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy were to open to trade,which amount of surplus would be transferred?

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The fair trade movement:

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